Drilling muds are traditionally based on water, either fresh water, seawater, naturally occurring brines, or prepared brines. Many muds are oil-based, using direct products of petroleum refining such as diesel oil or mineral oil as the fluid matrix. In addition, various so-called synthetic-based muds are prepared using highly refined fluid compounds that are made to more-exacting property specifications than traditional petroleum-based oils. In general, water-based muds are satisfactory for the less-demanding drilling of conventional vertical wells at medium depths, whereas oil-based muds are better for greater depths or in directional or horizontal drilling, which place greater stress on the drilling apparatus. Synthetic-based muds were developed in response to environmental concerns over oil-based fluids, though all drilling muds are highly regulated in their composition, and in some cases specific combinations are banned from use in certain environments.

A typical water-based drilling mud contains a clay, usually bentonite, to give it enough viscosity to carry cutting chips to the surface, as well as a mineral such as barite (barium sulfate) to increase the weight of the column enough to stabilize the borehole. Smaller quantities of hundreds of other ingredients might be added, such as caustic soda (sodium hydroxide) to increase alkalinity and decrease corrosion, salts such as potassium chloride to reduce infiltration of water from the drilling fluid into the rock formation, and various petroleum-derived drilling lubricants. Oil- and synthetic-based muds contain water (usually a brine), bentonite and barite for viscosity and weight, and various emulsifiers and detergents for lubricity.

Drilling mud is pumped down the hollow drill pipe to the drill bit, where it exits the pipe and then is flushed back up the borehole to the surface. For economic and environmental reasons, oil- and synthetic-based muds are usually cleaned and recirculated (though some muds, particularly water-based muds, can be discharged into the surrounding environment in a regulated manner). Larger drill cuttings are removed by passing the returned mud through one or more vibrating screens, and sometimes fine cuttings are removed by passing the mud through centrifuges. Cleaned mud is blended with new mud for reuse down the borehole.

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